ZuoTi.Pro
Question

Saved $ 52,000 Total equity a. What is the sustainable growth rate for the company? (Do not round Intermediate calculations a


Saved Youve collected the following information about Molino, Inc.: $ 150,000 Sales Net Income Dividends Total debt $12,000
business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1
1
sustainable growth rate=(ROE * Retention Ratio)/(1-ROE*Retention Ratio)
ROE =net income / total Equity =12000/52000 =23.0769% 23.08%
Retention Ratio =1-Dividend Payout=1-(8000/12000) =66.6667% 66.67%
sustainable growth ratio =(23.0769%*66.6667%)(1-23.0769%*66.6667%) =15.3846%/84.6154 =18.1818% 18.18%
2. Net total assets = (Debt + Equity) * (1+ Sustainable growth rate)
New Total Asset =(60000+52000)*(1+18.1818%) = 112000 (1+0.181818)
= 112000*1.181818 = 132363.6160		 132363.62
New Debt =D/(D+E)*New total Assets =60000/(60000+52000)*132363.6160
=60000/(112000)*132363.6160 = 70909.08		 70909.08
Old Debt 60000
Increase in Borrowing (new debt - old debt)= 70909.08-60000 10909.08
3
internal growth rate =ROA *Retention Ratio/(1-ROA*Retention Ratio)
ROA =Net income/ Total assets = 12000/112000=10.7143% 10.71%
internal growth rate=10.7143%*66.6667%/(1-10.7143%*66.6667%)
= 7.1429%/92.8571		 7.69%
1 0
Add a comment
Know the answer?
Add Answer to:
Saved $ 52,000 Total equity a. What is the sustainable growth rate for the company? (Do...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • You've collected the following information about Molino, Inc.: $200,000 Sales Net income $ 14,000 Dividends $...

    You've collected the following information about Molino, Inc.: $200,000 Sales Net income $ 14,000 Dividends $ 9,000 Total debt $80,000 Total equity $62,000 a. What is the sustainable growth rate for the company? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.. 32.16.) b. If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? (Do not round intermediate...

  • You've collected the following information about Molino, Inc. Sales $215,000 Net income $ 17,300 Dividends $...

    You've collected the following information about Molino, Inc. Sales $215,000 Net income $ 17,300 Dividends $ 9,400 Total debt $77,000 Total equity $59.000 38:44 ces a. What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? (Do not...

  • You've collected the following information about Odyssey, Ind. Sales Net income Dividends Total debt Total equity...

    You've collected the following information about Odyssey, Ind. Sales Net income Dividends Total debt Total equity $165,000 $ 12,600 $ 8,300 $66,000 $55,000 What is the sustainable growth rate for the company? (Do not round intermediate calculations. Round your answer to 2 decimal places. ( e.g., 32.16)) Sustainable growth rate If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? (Do not round intermediate calculations. Round your...

  • What is the Sustainable growth rate? Sig, Inc., wishes to maintain a growth rate of 12...

    What is the Sustainable growth rate? Sig, Inc., wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of 43. The profit margin is 5.9 percent, and the ratio of total assets to sales is constant at 1.80 What dividend payout ratio is necessary to achieve this growth rate under these constraints? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded...

  • Can you please assist with the Dividend payout and max sustainable growth rate? High Flyer, Inc.,...

    Can you please assist with the Dividend payout and max sustainable growth rate? High Flyer, Inc., wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of .25. The profit margin is 5 percent, and total asset turnover is constant at 1.20. a. What is the dividend payout ratio? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal...

  • Fulkerson Manufacturing wishes to maintain a sustainable growth rate of 10 percent a year, a debt–equity...

    Fulkerson Manufacturing wishes to maintain a sustainable growth rate of 10 percent a year, a debt–equity ratio of .37, and a dividend payout ratio of 34 percent. The ratio of total assets to sales is constant at 1.38.    What profit margin must the firm achieve in order to meet its growth rate goal? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)    Profit margin             %

  • Fulkerson Manufacturing wishes to maintain a sustainable growth rate of 9.25 percent a year, a debt–equity...

    Fulkerson Manufacturing wishes to maintain a sustainable growth rate of 9.25 percent a year, a debt–equity ratio of .40, and a dividend payout ratio of 32.5 percent. The ratio of total assets to sales is constant at 1.35. What profit margin must the firm achieve in order to meet its growth rate goal? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Profit margin %

  • Gilmore, Inc., had equity of $190,000 at the beginning of the year. At the end of the year, the company had total assets...

    Gilmore, Inc., had equity of $190,000 at the beginning of the year. At the end of the year, the company had total assets of $345,000. During the year, the company sold no new equity. Net income for the year was $40,000 and dividends were $5,600. a. What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the sustainable growth...

  • Problem 4-22 Sustainable Growth Rate [LO3] Cambria, Inc., had equity of $200,000 at the beginning of...

    Problem 4-22 Sustainable Growth Rate [LO3] Cambria, Inc., had equity of $200,000 at the beginning of the year. At the end of the year, the company had total assets of $355,000. During the year the company sold no new equity. Net income for the year was $42,000 and dividends were $6,000. What is the sustainable growth rate for the company? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16) Sustainable growth rate What...

  • Dahlia, Inc., wishes to maintain a growth rate of 15 percent per year and a debt–equity...

    Dahlia, Inc., wishes to maintain a growth rate of 15 percent per year and a debt–equity ratio of .2. The profit margin is 7.1 percent, and the ratio of total assets to sales is constant at 1.68. What dividend payout ratio is necessary to achieve this growth rate under these constraints? (Do not round intermediate calculations. A negative answer should be indicated by a minus sign. Enter your answer as a percent rounded to the nearest whole number, e.g. 32.)...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT